Study questions savings from ‘prior approval’ health care reviews

The state Insurance Department has been seeking restoration of its “prior approval” power over health insurance premium rate increases, citing significant hikes since it lost that power in 2000. That was the year that insurance companies switched to a “file and use” system, where they could submit rate applications and then begin charging the new rates with no prior oversight by regulators.

The average increase, regulators say, has been 13.96 percent a year, compared to 5.2 percent before 2000.

Now, a study commissioned by the Business Council of New York State has questioned whether restoration of prior approval would lead to savings that state officials have projected. The study was performed by benefits consultant Milliman Inc.

“(S)avings from the prior approval proposal are minimal and next to impossible to identify in the first year,” the Milliman report says.

“We all want to find ways to keep health insurance costs in check,” said Kenneth Adams, the council’s president and CEO. “However, artificially suppressing premium rates without addressing what really drives the cost of health care does not make premiums more affordable; it only postpones and compounds the price increases that will be required in later years to cover ever-increasing expenses.”